New South African fraud exposed

A major area of operations risk is in the areas of fraud. From Johannesburg comes the news that South Africa is currently in the midst of what some are describing as a fraud pandemic. At its epicentre is the Companies and Intellectual Property Registration Office (CIPRO). Over the past two years corrupt officials at CIPRO, acting with seeming impunity, have facilitated hundreds if not thousands of scams which have hit the South African Revenue Service (SARS), a number of prominent companies, and hundreds of smaller private businesses. Just two weeks it was reported how in 2008 duplicates of Sun Microsystems South Africa Pty Ltd and SBC International Management Services were fraudulently registered as companies on CIPRO. Bank accounts were set up in these counterfeit companies' names. R51million (USD 6.4 million) in tax refunds from SARS, due to the legitimate companies, were then diverted into the counterfeit's accounts.

An investigation has revealed that this CIPRO based scam was just the tip the iceberg. Counterfeit companies are being fraudulently registered through CIPRO, on an ongoing daily basis, to facilitate cheque and other forms of fraud. No proper due diligence is being done. Over the past two years the directors of several prominent companies have also been fraudulently deregistered, and new directors inserted. Again, the intention is to facilitate fraud of one kind or another.

For more details visit: http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71619?oid=138904&sn=Detail

For a transcript of a discussion or to listen to a recoding on South Africa’s MONEYWEB radio please go to: http://www.moneyweb.co.za/mw/view/mw/en/page295799?oid=309657&sn=2009%20Detail&pid=287226

Panelists in the discussion includes David Alexander (who is a guest expert in our “RISK MANAGEMENT - CASE STUDIES FROM THE 2008 CRISIS” course in Johannesburg).